1. Middlefield Motors is evaluating a project that would cost 5,300 dollars today. The project is expected to have the following other cash flows: 2,000 dollars in 1 year, -2,470 dollars in 2 years, and 6,640 dollars in 4 years. The cost of capital of the project is 9.86 percent. What is the net present value of the project?
2. Gomi Waste Disposal is evaluating a project that would require an initial investment of 68,200 dollars today. The project is then expected to produce annual cash flows that grow by 2.11 percent per year forever. The first annual cash flow is expected in 1 year and is expected to be 3,280 dollars. The project’s internal rate of return is 6.92 percent and its cost of capital is 9.69 percent. What is the net present value (NPV) of the project?